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V0914-19 29 April 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimiento del trabajo

Compensation for permanent disability due to illness is not exempt from Personal Income Tax (IRPF)

A worker with absolute permanent disability inquired whether compensation from a group life insurance policy is exempt from Personal Income Tax. The Directorate General for Taxes (DGT) ruled that because the policy covers illness as well as accidents, the exemption does not apply.

The question raised

Taxation of the amount received: possible exemption in the Personal Income Tax (IRPF) and tax classification of the income.

The DGT's ruling

The income obtained is classified as employment income pursuant to Article 17.1 of Law 35/2006. The exemption under Article 7.d) is not applicable because the insurance contract covers both accidents and illness. As it does not derive exclusively from accident insurance, the compensation for permanent disability does not benefit from said exemption.

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